Good sales practice is to always sell value. Easy right? But, Lawyers, Accountants, Plumbers, Electricians, Taxis, Personal Coaches …… all sell their services by the hour.
I don’t want to buy 30 hours of my accountants time, or 512 hours of my web developers. I need my taxes done or my web site built. That’s what I am paying for. Unfortunately we are trained to think that way. It’s wrong. For both seller and buyer.
So, what is to be done ?
The Time and Materials model is to calculate how long the job takes and multiply by the hourly rate… occasionally with a minimum charge of (say) 1 hour.
That is great for working out your costs. But it should never find its way to the customer. Because the value is greater than that equation. What is it worth to get that pipe fixed so that it doesn’t burst and flood your house? A little more than $450 ? (3 hours @ $150 dollars per hour). Consider some qualitative factors that should also affect the price.
- I did this exact job for three other people just last week.
- I know how to fix it – and fix it reliably.
- I can do that job right now – why wait till next week.
- Your friends recommended me.
- Look at my 5 star rating on Yelp.
- What is the cost to you of delaying this work or worse, not doing it at all.
The Fixed price value driven model has been around for a long time in larger companies. I think it is time to bring it to the street. What do you think ?
Postscript I am reminded of the apocryphal story about the guy that put out a giant fire on an oil rig. He charged $1 million. When questioned why he charged $1 million for 30 minutes work he replied that they didn't pay for 30 minutes of work. They paid for 30 years of experience. OH - and if you liked this - you might also enjoy this.